Finance

5 Reasons Why You Should Purchase a Term Insurance Policy

Term insurance is one of the most affordable types of life insurance productsThe policy offers a risk cover against death on the life of the policy buyer or the life assured for the duration of the policy tenure. The policy term for term insurance policies usually ranges between 5 years and 40 years, During this period, if the life assured happens to succumb to an untimely death, the nominee of the concerned individual will receive a payout from the insurer. 

Although term insurance policies offer a high cover to policyholders, they do not offer maturity benefits and/or survival benefits during/after the policy term. Thus, this type of policy is ideal for individuals looking to purchase an affordable life insurance plan that offers a high sum assured. Listed below are a few reasons why a term insurance policy should be part of your financial portfolio:

Offers Financial Security: The primary reason why you should purchase a term insurance policy is that it offers financial security in case of untimely eventuality in the future. If the life assured passes away during the policy term, a death benefit will be paid out to the nominee, helping them pay for immediate and long-term financial needs. To ensure that your dependents are able to benefit from the payout, it is a must to consider your family’s lifestyle, current expenses, future financial goals, any liabilities/debts that you might have, and inflation. The sum assured that you opt for should provide sufficient financial security to your dependents. 

Priced Well: Term insurance policies are more affordable than other types of life insurance policies. Since term insurance policies do not offer returns to the policyholder during or after the policy term, you can opt for a high cover without having to pay large premiums for the policy. Also, with term insurance, the younger you are when you purchase the policy, the lower the premium quote is likely to be. That said, regardless of the type of insurance policy that you will be purchasing, it is a must to compare premium quotes offered by different insurers for policies that offer similar coverage. Doing this will help you purchase an affordable policy with coverage that matches your needs. 

Can Be CustomizedAlthough term insurance policies offer basic coverage, policy buyers can customise and enhance the coverage offered by the policy by opting for riders offered by the insurer. A few popular riders that are offered by life insurance providers include the Accidental Death Benefit Rider, Accidental Disability Benefit Rider, Critical Illness Rider, Income Benefit Rider, and Waiver of Premium Rider. Keep in mind that the number and types of riders offered by different life insurance companies will vary. 

Tax Benefits: By purchasing a term insurance policy, you can claim tax benefits as per the provisions of the Income Tax Act, 1961. The premiums that you pay towards your term insurance policy are eligible for tax benefits under Section 80C of the Income Tax Act, up to a maximum of Rs.1,50,000. Similarly, any payout that your nominee may receive through the policy is also eligible for tax benefits under Section 10(10D) of the Income Tax Act. 

Hassle-Free Buying Process: Term insurance policies are usually straightforward and easy to understand. The policy brochure, which is available on the official websites of life insurance companies, also consists of easy-to-understand terms and conditions. Further, term insurance policies can be purchased through online or offline channels, as per the buyer’s convenience. Purchasing a term insurance policy online, either through the official website of an insurance provider or through a trusted third-party insurance website, is hassle-free, convenient, and secure. If you require any assistance while purchasing a term insurance policy, you can always contact the insurer’s customer service team through the toll-free number/email ID mentioned on the website of the insurer. 

It is advisable to purchase a term insurance policy at the earliest, considering the many benefits it offers. Make sure to do your due research, assess your coverage needs, and compare a few policies available in the market before purchasing a term insurance policy for yourself. 

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Financial Analyst at Farmer's Insurance with over 25 years of experience working in the Financial Industry

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